MicroStrategy Inc MSTR CEO Michael Saylor shared insights into the company’s decision to invest in Bitcoin BTC/USD as a means to drive growth and protect capital.
What Happened: Saylor in an interview with Fox Business on Monday acknowledged that as a mid-sized software company, it was apparent that competing with tech giants like Google, Microsoft, and Apple was not a viable option for MicroStrategy.
“What we did in August of 2020 was recognize that there’s no way we’re going to outgrow Google and Microsoft and Apple computers as a mid-sized software company… So we started looking to do an acquisition of a high growth, digital monopoly of our own. And we realized that Bitcoin is like a high tech dominant digital network growing at 40 or 50% a year. And so we bought it, it’s kept growing 40 or 50% a year. And now we’re using our balance sheet to grow the company as well as our P&L," said Saylor.
Saylor also expressed optimism about the future of Bitcoin, mentioning the upcoming halving in 2024, which will reduce the supply, and the potential impact of spot ETFs, which could double the demand for Bitcoin.
“Before the supply and demand are in balance right now, but after the halving in April, the supply gets cut in half. And after the sort of spot ETFs come online, the demand’s got at least double. So the only thing that’s going to adjust there is the price in order to get to market. And so I think you watch the spot ETFs and you watch for the halving and the next 12 months are pretty auspicious for the asset class," he added.
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Why It Matters: According to Saylor, Bitcoin offers an innovative approach for companies to preserve capital, bypassing the conventional methods of rewarding shareholders through expensive acquisitions, buybacks, dividends, or debt. He argued that these traditional approaches have a high failure rate and suggested that holding capital in government securities lacks the potential for significant returns due to low interest rates.
Last week, in an interview with CNBC's “Squawk On The Street,” Saylor highlighted several reasons why the price of Bitcoin could continue to climb.
MicroStrategy reported third-quarter financial results and updated investors on its Bitcoin holdings after the bell on Wednesday. The enterprise software and business intelligence company said it acquired 6,067 Bitcoins during the quarter for an average price of $27,531.
MicroStrategy now holds a total of 158,400 Bitcoins at an average cost of $29,586 per coin.
Photo Courtesy: JOCA_PH On Shutterstock.com
Price Action: At the time of writing, BTC was trading at $34,962.55 up 0.29% in the last 24 hours, according to Benzinga Pro.
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